CBN Governor, Olayemi Cardoso
According to latest data released by the Central Bank of Nigeria, it reveals that credit to the Federal Government rose sharply over the 12 months ending in May 2026.
The surge highlights an aggressive public sector appetite for borrowing despite the prevailing tight monetary conditions in the country.
According to the CBN’s latest monetary and credit statistics on Wednesday, total credit to the government climbed to N40.38tn in May 2026, up from N22.99tn recorded in the corresponding period of 2025. This marks a year-on-year increase of N17.39tn (approximately N17.4tn), representing a massive 75.6 per cent rise in lending exposure to the public sector.
On a month-on-month basis, the government’s borrowing momentum showed no signs of slowing down, expanding by N779.70bn in just 30 days from the N39.60tn reported in April 2026.
Banking sector data indicate that commercial and merchant lenders are continuing to allocate significant liquidity towards government securities. Rather than channelling funds into the wider economy, financial institutions have heavily favoured low-risk instruments like Federal Government bonds and treasury bills to help finance ongoing fiscal operations.
This steady rise in public sector credit reflects a strategic shift by fiscal authorities to seek alternative funding sources through domestic debt issuance, moving away from direct CBN financing.
In stark contrast to the government’s aggressive borrowing, credit to the private sector grew modestly in May 2026. Lending to businesses and households ticked up to N81.04tn, compared to N80.59tn in April, reflecting a highly cautious approach by lenders and a slower expansion of credit to the real economy. Despite this sluggish monthly growth, private sector credit remains dominant in absolute terms, sitting at roughly 2.01 times the level of public sector credit for May.
Economic analysts and financial experts suggest that the data clearly underscores a persistent tilt towards public sector borrowing, driven by the government’s need to fund its fiscal deficit. While the banking system remains liquid, economists caution that if financial institutions continue to prioritise high-yield government debt, it could permanently “crowd out” productive private industries. Without access to affordable credit, local businesses and manufacturers may struggle to expand, potentially slowing overall economic growth.
The apex bank has not released a detailed sectoral breakdown of private credit allocation for the period under review.
However, the overarching trend points towards a banking sector heavily recalibrating its risk dynamics to favour government obligations over the real economy.
